In our world today, and to an ever-increasing extent in the years to
come, no product sold on the market can be developed without taking into considerations
its impact on the environment. This statement is particularly valid for a food product
such as sugar, given the rising interest and expansion of markets for natural and organic
products obtained through procedures, both in the agricultural and industrial stages, in
which the use of chemicals and damage to the local and global environment are avoided or
reduced to a minimum.

Amidst the tense, controversial discussions taking place at present
within the so-called Millennium Round, its agricultural negotiations and the issue of
whether to include environmental matters in these talks, cane sugar producers have many
advantages to offer and arguments to show the superiority of cane as a raw material for
food and energy production; as opposed to other raw materials for sugar or substitute
sweetener production such as corn and sugar beets.

The aim of this paper is to attempt to present a brief summary of the
potential of sugar cane as regards the environment as well as to discuss the current
status of environmental legislation in effect in countries in the Latin American and
Caribbean Region.

Cane Agriculture

The various cane varieties cultivated for commercial purposes
world-wide are species or hybrids of the Saccharum genus, which in turn belongs to the
grass family. Its geographical origin remains a controversial subject, but in general it
is acknowledged that it originated in the South Pacific region, Java and New Guinea, and
subsequently spread out from there.

One of the outstanding features of sugar cane is, among others, its
extraordinary capacity for growth. It is not unusual to find agricultural yields exceeding
100 tons per hectare annually on commercial acreages. Its genetic potential is much
greater. When varieties are selected and agrotechnical handling are carried on, with the
objective of maximizing biomass production, it is possible to obtain yields as high as 300
t/ha and even exceeding this volume. Theoretical potential of up to 400 t/ha is estimated.
This high productivity rate is the result of a high photosynthetic efficiency, compared to
other commercial crops, which permits an increased utilization of solar energy and,
consequently, a higher coefficient for fixing atmospheric carbon dioxide.

Further, cane agriculture can be practised with a minimum consumption
of chemical products and highly compatible with the environment and soil conservation. An
issue of the utmost importance, from an ecological as well as economic standpoint, is the
harvest of green cane; that is, without previous burning the foliage for harvest.
Harvesting green cane is a widespread practice that has been used for many years in Cuba,
and which has been gradually extended to other countries such as Australia and Brazil. The
issue is not only the pollution problems generated during burning, but most important,
improved soil fertility conservation, lower consumption of herbicides and the possibility
of using part of the residues as fuel, animal feed or raw material.

Further, the use of fertilizers can be reduced significantly, and in
some cases even eliminated, under advantageous economic conditions (4). Noteworthy
examples of alternatives that contribute to reducing input of chemical fertilizers,
include those recycling in the field the wastes and residues of the industry such as
filter mud, and the liquid effluents as irrigation water.

In Cuba, it has been a widespread practice for many years to use
residuals in cane irrigation, a practice referred to as ferti-irrigation. Likewise,
irrigation of cane fields with the vinasse obtained as a waste from alcohol distilleries
is a generalized practice in Brazil. These practices, handled with adequate control, not
only solve the problem of how to dispose of liquid wastes but also make an important
contribution of both the organic and mineral materials required by the soil. Both filter
mud and agricultural crop wastes may be improved considerably with regard to their value
as fertilizer through relatively simple compost processes, whereby ashes from bagasse
furnaces and other elements contributing phosphorous and potassium  of great
importance to the crop -- are added. The application of minimum tilling methods or
localized tilling in cane acreages has been another element of significant economic
importance and contribution to improved soil conservation. Several specially-designed
alternatives or techniques have been used on a widespread basis in the various types of
soils, with highly beneficial results.

The struggle to combat pests that attack sugar cane is carried out
entirely through biological methods. Control of the sugar cane borer (Diatrea Saccharilis)
is achieved through the systematic reproduction and release of a natural enemy, the Cuban
fly Lixophaga Diatrea. Cane diseases are confronted through the ongoing development and
inclusion of new commercial varieties, a well-established practice in most of the
principal sugar cane-producing countries. Crop rotation and inter-cropping, although
practised only to a limited extent at present, have shown an excellent economic
possibility and positive effect for cane, basically when used with beans, peanuts and the
leguminous genus in general.

Industrial Processing -
Diversification

Cane is not only a plant that grows at a faster rate than other
commercial crops and can be cultivated with sustainable techniques. The structural and
chemical composition of sugar cane makes it particularly appealing for transformation into
valuable products through industrial processing. For years, sugar has been the principal,
and virtually only commercial product obtained from cane. Probably the only exception, and
then only fairly recently, is the Brazilian alcohol fuel programme. The objective is both,
to take advantage of cane for other purposes different from sugar, such as use of the
by-products of the sugar industry and sugar itself as raw materials to obtain products
with a high aggregate value and of interest to the market. This is what the so-called
diversification consists of. The concept of diversification mentioned above and its
economic and strategic importance for cane-producing countries has been the focus of
attention at several international fora in the past few years. A study of the alternatives
for diversification of sugar cane calls for an analysis of the different fractions that
make up its vegetative structure, which are shown in Table 1.

TABLE 1: VEGETATIVE STRUCTURE OF SUGAR CANE ( % OF DRY MATTER )

Part

Total Plant

Part growing
above ground

Clean Stalks

50

59

Tops

10

12

Leaves

25

29

Roots

15

- -

Total

100

100

These fractions in turn have the average composition shown in Table 2
below:

TABLE 2: CANE COMPONENTS (%)

Components

Clean stalks

Tops +
Leaves

Total sugars

15,43

2,18

Sucrose

14,10

- -

Lignocelullose
(Fiber)

12,21

19,80

Ashes

0,54

2,31

Other

0,82

2,43

Total dry
matter

29,00

26,00

Water

71,00

74,00

A study of the tables above clearly
shows the importance of bearing in mind the potential use of the so-called agricultural
wastes (tops + leaves), which represent nearly 40 % of the total weight.

Likewise, the clean stalks are made up mainly of soluble sugars; and
bagasse constitutes the lignocellulose portion. Soluble sugars, both those taken directly
from cane juice and those extracted during the intermediate currents of the sugar process
(filter juice, A or B molasses) or from final molasses may be transformed into products
with a high value and market interest through chemical or biotechnical processes. Table 3
below shows some of the principal products manufactured today on a commercial scale.

TABLE 3: SOME DERIVATIVES OF CANE SUGARS

The main advantage of using cane
juice for these products, rather than molasses, is the possibility of having the bagasse
as an energy source capable of satisfying the thermal and electrical demands of the
industrial process. This is the case of the traditional sugar industry and of alcohol
production as carried out in Brazil, directly from cane. As will be seen further on, with
this system it is not only possible to satisfy the energy requirements of the process but
to obtain significant surplus electricity as well.

For its part, cane bagasse represents a renewable source of fibrous raw
material, which can replace wood in many of its applications. Various types and selections
of top-quality agglomerated boards are produced from cane bagasse at present. It is
estimated that world installed capacity for bagasse boards of different types totals
approximately 800.000 cubic meters annually; nonetheless, this still represents only 2% of
the total production volume. In Cuba, there are five bagasse board factories, which
produce the so-called particle board (low density). One of them has a double production
line, where the Mende, or medium density type is also manufactured.

Likewise, paper and cardboard of excellent quality may be obtained from
bagasse, capable of competing with equivalent products obtained from wood. The only area
in which bagasse is at a disadvantage compared to wood is the type of paper used for
industrial purposes, which calls for high tenacity. This is impossible to achieve with
bagasse due to the features of its fiber, which is shorter than soft woods.

The ever-increasing awareness at the international level of the need to
preserve the forests that still exist in tropical and subtropical regions, and the
restrictions on further development the extraction of commercial areas in temperate
regions, open up interesting prospects for products made from bagasse fiber, which in
addition to being an annually renewable source, may be processed through less intensive,
and therefore less aggressive to the environment technologies, than traditional wood
sources.

Cane for Animal Feed

In countries with tropical and subtropical climates, which is where
sugar is produced, animal feed availabilities are one of the most crucial economic
problems. For many years, the attempts to transfer models based on the use of grains and
cereals have proven not to be economically feasible.

Sugar cane and the by-products of the sugar industry can, nonetheless,
represent fundamental feed support for both rumiants and swine, as shown by international
experience. For cattle feed, there is a wide range of experience in the comprehensive use
of cane, with good production indicators and economic results, when combined with an
adequate supply of cane pieces or chopped cane. Glucogenic precursors such as those
obtained from grain residues (rice for example), and small amounts of genuine protein,
both vegetable and animal (a significant part of assimilable nitrogen requirements can be
furnished through urea) must also be added. Bagasse or its pith have been used in cattle
feed, for both dairy cattle and fattening. For many years a treatment for pith was used in
Cuba to increase its digestibility, using sodium hydroxide and adding final molasses and
urea. More recently, this technology has been replaced by a more economical alternative,
in which the fiber is pre-digested using lime.

In Brazil, there is a wide range of experience in fattening cattle
using bagasse hydrolized with steam as a base. Although this option requires a larger
investment for building treatment facilities, it has the advantage that chemicals are not
needed.

Compared to grains and cereals, the
principal restriction of sugar cane as feed for monogastric animals is the fact that it
has virtually no protein. Nonetheless, by-products of the sugar industry are perfect as a
cheap source of metabolizable energy in swine feed diets. A solution must be found to
contribute protein in diets, which may be achieved through protein concentrates such as
soybean or fish flours. Fodder (torula) yeast has been used on a large scale in Cuba as a
protein concentrate for swine feed. It is produced at industrial plants through aerobic
fermentation of final molasses. Saccharomyces yeast, another sugar cane derivative,
obtained as a by-product of alcohol distilleries, is another highly economically feasible
alternative. Brazil is unquestionably the country with the greatest potential for this
option; and in fact, yeast recovery has been on the rise over the past few years. The
technical and economic feasibility of swine rations based on intermediate molasses from
sugar factories, and yeast from alcohol distilleries has been proven on a commercial scale
in both Cuba and Brazil.

Sugar Cane and Energy

The high photosynthetic capacity of sugar cane makes it an important
source of energy. A comparison of the energy value of the cane biomass and the energy
consumed in its harvest and cultivation shows a ratio of 20:1. This makes sugar cane a
biomass of enormous interest at present, as alternatives are under study to reduce the
rate of gas accumulation and consequent global warming, as a result of the use of fossil
fuels. The cane sugar industry creates its own fuel, bagasse, which is not only capable of
satisfying the energy demands of the factory but generating surplus electricity, with the
consequent ecological and economic benefits.

The traditional sugar mill is highly inefficient from an energy
standpoint, since it was designed to not be forced to have bagassesurpluses. On average,
steam consumption for the process ranges between 450 and 550 kg of steam per tone of cane
processed. Nonetheless, consumption of under 300 kg / t is possible to achieve, with
schemes and equipment well-known and widely used in the beet sugar industry.

Likewise, the furnaces in which the bagasse has traditionally been
burned for steam production have energy efficiency rates of approximately 60-65%; whereas
it is possible to achieve efficiency rates of nearly 90%, with heat-recovery designs and
systems to reduce the final temperature of combustion gases. These traditional energy
schemes were designed to obtain precisely the electrical power required by the factory as
the steam produced by low-pressure turbogenerators passes through. In order to produce
surplus electricity at the sugar factory, steam consumption must be reduced in the
process, furnace efficiency must be improved; and at the same time, steam generation
pressure must be increased. In this case, it is possible to obtain surpluses of up to 100
kw-hr per ton of milled cane, as proven by experiences on a large scale in Hawaii, Reunion
Island and Florida. New technologies currently in the development stage, based on
gasification of the biomass and use of gas turbines and combined cycles, would make it
possible to increase the generation potential of the sugar industry to levels
approximately twice those mentioned above.

Further, the use of agricultural
residues of the cane harvest to produce energy would also make it possible to double the
factory potential and use facilities during the between-crop period. In Cuba, there are
experiences on a commercial scale with use of cane straw as fuel in mill furnaces; and
work is currently underway on studies to perfect this and storage methods. And lastly,
from an energy and environmental standpoint, it is absolutely essential to mention the
strategic importance of ethyl alcohol production from cane, for use as automotive fuel.
The experience of Brazil is well-known and has been discussed in depth at the
international level.

Environmental Standards and Legislation

The inclusion of environmental issues in domestic legislation in
countries introduces legal control as a guarantee for compliance with the standards
provided for in each case.

Policies aimed at correcting failure to comply with environmental
legislation may be divided basically into two general types: those using incentives (or
policies based on market operation), whereby taxes or charges are collected according to
the damages caused by those who pollute; and those calling for quantitative restrictions
(or "official control mechanisms"), which do not have this flexibility.

The status of environmental
legislation in our region presents a wide range of features and stages: some nations
include it in their Constitution, and even have ministries, secretariats and/or
institutions devoted to the environment. Most have general legislation at the state level
(implemented or in the implementation stage). And those with the least provisions include
specific standards applicable to the sugar agroindustry and others are in the process of
preparing legislative bills. Our countries are also unequal insofar as drafting,
implementation, demands and compliance of environmental laws and standards, in accordance
with existing differences in legislation, ecological awareness and status of economic
development. The existence of environmental legislation has promoted research projects as
well as the search and development of ecologically compatible options in the industry.

The most comprehensive legislation and/or regulations spell out both
qualitative and quantitative issues, reflecting the parameters to be evaluated, analytical
methods, benchmarks, frequency of sampling, spillage standards, quality criteria and
penalties, among other specifications. They also include citizens right to a healthy
and ecologically balanced environment, and therefore provide for the legitimate power to
denounce acts that violate this right and to claim redress of damages caused. Laws provide
for methods of determining liability and penalties. Some legislation also covers
environmental education, research and development and incentives for environmental
activities.

Within the regional sphere, our
countries have adopted comprehensive multilateral and bilateral instruments pertaining to
the environment; at the international level, conventions on the environment and natural
resources have been entered into, which are included in legal ordinances of countries. To
an ever-increasing extent, ecological issues are being reflected in international
treaties, such as in funding projects and international co-operation projects. The
regional sugar agroindustry is adopting measures aimed in some cases at facing the demands
of environmental legislation in effect; and in others, at preparing for imminent reality
of implementation in the respective nations of standards and controls to prevent
environmental pollution.

General and Specific Environmental Standards

National, state and federal environmental standards related to the
sugar agroindustry are those dealing with conservation of water resources, pollution and
emission released into the air, disposal of liquid wastes or waste waters and solid
wastes, noise and odors. As follows are the general parameters used world-wide for
characterization, standardization and control:

TABLE 4: MEASUREMENT UNITS FOR SOURCES OF POLLUTION

In the member countries of GEPLACEA,
although implementation levels and compliance with environmental legislation are in
different stages, the interest and need to search for and develop ecologically compatible
technological options for the sugar agroindustry are increasingly evident.

In this respect, the activities
involved in production of "organic sugar" and "cleaner production
techniques", which characterize the technologies and processes using natural (as
opposed to chemical) inputs and preventive, rather than corrective, measures are being
adopted to an ever-increasing extent within the environmental policies of the agroindustry
in several sugar-producing countries. This is one of fastest, more economical means of
contributing to improving the environment.

Water Resources

The information available deals with laws, regulations and/or standards
providing for limits for protecting water resources, depending on their use; as well as
limits on waste waters, both domestic and industrial, that are released. The table below
shows the ranges of maximum limits in our region of some of the parameters established for
waste waters dumped into water bodies receptors.

The following parameters are included when the waters are used to
irrigate vegetables: sodium absorption ratio, NMP of coliform bacteria; and when not used
to irrigate vegetables: NMP of total coliform bacteria and density of fecal coliform
bacteria, among others.

Mexico is one of the countries that currently include the sugar
agroindustry within specific standards (NOM-CCA-002-ECOL/1993). This standard provides for
limits on discharges into water receptors where wastes from the cane sugar-producing
industry are dumped.

TABLE 6: STANDARDS APPLICABLE IN
MEXICO (NOM-CCA-002-ECOL/1993AND THE NATIONAL WATER ACT*)

$ (Pesos) = a V + b (DQO-300) x V x
10-3 + C (SST-30) x V x 10-3

The World Bank demands that
pollutant levels in effluents from sugar mills not exceed the limits spelled out in the
table below. Further, as a preventive measure, it recommends that the effluent flow be
reduced to 1.3 m3/t, with a trend toward reaching a level of 0.9 m3/t
through implementation of water recycling schemes.

TABLE 7: POLLUTANT LEVELS IN EFFLUENTS OF SUGAR MILLS (WORLD
BANK)

Air Emission and Air Quality

As opposed to the regulations and standards issued for wastes,
regulations issued by member countries in the region for atmospheric emissions are of a
much more general nature at present. The most specific standards are based on established
types of stationary sources, or on mobile units, rather than on a standard issued by type
of industry.

The international standards governing atmospheric emissions are
established according to the social and environmental impacts generated by their
continuous discharges. It has been established that particles below 50 micras, released
during long periods of exposure, have an accumulative effect that alters peoples
breathing capacity. Sulfur anhydride (SO2) at certain concentration levels also has an
effect on breathing, but what has been most seriously questioned is its role in the cause
of acid rain, which affects large extensions of forests and vegetation. Nitrogen oxide
(NOx) has an impact because it is a photochemical precursor of ozone, which affects the
breathing capacity of both humans and plants. And finally, CO2 emissions are important, as
the number one cause of the greenhouse or global warming effect.

Within this context, standards in the region are as follows:

TABLE 8: AIR QUALITY PARAMETERS (Latin American and Caribbean
Countries)

The following table show emission
standards for particles from bagasse furnaces established by credit institutions (World
Bank) and those in effect in various countries.

In the mid 1990s, the international scientific community reached
a broad consensus regarding the existence of a phenomenon known as Climate Change, caused
by the increase in concentrations of certain gases in the air, such as carbon dioxide (CO2),
methane (CH4), nitrous oxide (NOX) and chloride fluorocarbons
(CFCs), all referred to as greenhouse effect gases (GEG).

The increase in their concentrations produce greater retention of the
radiation emitted by the earths surface, with consequences on the earths
thermal system.

A total of approximately 6.000
million tons of carbon are released annually (one ton of carbon equals 3,66 t of CO2 );
and on the order of 3.000 million tons remain and build up in the air. The effects
produced by the presence of gases with a greenhouse effect, carbon dioxide in particular,
on the weather system have been studied and are contained in the conclusions of the Second
Report of the Intergovernmental Panel on Climate Change (IPCC), made up of an important
scientific research group established to define the scope of the phenomenon and draft
possible strategies to combat it. As follows are some highlights of these conclusions:

The average temperature of the Earth could increase by between 1 to 3.5º C by the year
2100, unless policies are implemented to curb the growth of greenhouse gas emissions.

The level of oceans is estimated to increase by between 15 and 95 cm. by the year 2100.

The long life-span of many greenhouse gases, coupled with the thermal inertia of the
oceans, will produce long-lasting effect on temperatures.

Potential hazardous effects are forecast that will have impact on the economics and
quality of life of present and future generations (health problems, water and food
shortages, loss of housing, deterioration of ecosystems).

The success of adaptation will depend on technological advancements, institutional
arrangements, availability of funding, technology transfer, exchange of information and
the inclusion of issues related to climate change in economic decisions. Many developing
countries have very limited adaptation options, in view of the scant availability of
funding and technology.

The cost of mitigating and adapting to change can be reduced by implementing flexible,
cost-effective policies based on economic incentives as well as instruments coordinated at
the international level.

From 1995, when this report was drafted, to date, scientific evidence
of the impact of global warming continues to grow.

The United Nations Framework
Convention on Climate Change was designed as an unprecedented response to this global
phenomenon. It was adopted during the United Nations Conference on the Environment and
Development (also known as the Earth Summit) in June 1992 in Brazil. It received 155
signatures, including all Latin American countries; since then many countries have
ratified it. The last objective of the Convention and of any related legal instrument
adopted by its Conference of Parties, is stipulated in its Article Two. It is "to
achieve stabilization of concentrations of greenhouse gases in the atmosphere at a level
to impede dangerous anthropogenic interference with the climate system. This level must be
reached within a period of time to permit ecosystems to adapt naturally to the climate
change, guarantee that food production is not threatened and to allow economic development
to continue in a sustainable manner".

In addition to the commitments with regard to national emissions
inventories, domestic programmes and technology transfer, among others, the Convention
provided for the obligation of the nations listed in Annex 1 (industrialized nations) to
reduce their greenhouse effect gas emissions to 1990 levels by the year 2000

Nonetheless, in 1997, with only slightly less than three years left,
very few countries were in a position to fulfill this commitment.

Following the meeting of the
Conference of Parties, the highest body of the Convention in charge of periodically
reviewing its implementation, held in Berlin in 1997, finally, at the third Meeting held
in Kyoto in 1997 (COP3), the Convention Parties approved a protocol with legal
commitments and flexible mechanisms to facilitate its compliance. In the KYOTO Protocol,
industrialized countries (Annex I of the Framework Convention of Climate Change and Annex
B of the Protocol) assume the commitment to reduce their emissions by 5,2% on average,
compared to 1990 levels, between 2008 and 2012 years.

The European Union, United States and Japan will reduce their emissions
by 8%, 7% and 6% respectively. It is important to underline that the Protocol provides the
so-called flexibility mechanisms to facilitate this process, known as the KYOTO
mechanisms. They are as follows:

Establishment of an international market of emission reduction certificates, to serve as
a base for funding projects to reduce emissions and capture carbon.

Clean development mechanism, which allows for implementation of projects to reduce
emissions among the developed countries listed in Annex B and developing nations
(non-Annex B). Developing countries can receive investments from Annex B nations aimed at
curbing emissions or increasing the capture capacity (this point is still under
discussion); and obtain reduction certificates that may be accredited to the latter,
provided they are measurable and in addition to the efforts made in the territory of the
Annex B country involved. Part of the financial resources involved would be used to cover
administrative expenses and to support the developing countries that are particularly
vulnerable to the effects of climate change.

The Kyoto Protocol, its definitions and mechanisms proposed to reduce
the greenhouse effect open interesting prospects for the use of energy biomass and the
biofuel and alcohol fuel (ethanol) markets to recover CO2 from the atmosphere.

Within this context, sugar cane, for all the reasons outlined above, has excellent
opportunities and competitive advantages compared to other crops for production of biomass
or as raw material for sugar and alcohol fuel production. The use of corn, sugar beets or
other tubercles such as sweet potatoes and manioc does not seem to be interesting from the
energy, and therefore ecological, standpoint.